Apple fires Chinese supplier for using underage workers

Also reported company to the government for illegal labor practices.

When you go from six active cases of underage labor to 74 in one year, you know something's wrong. That's what Apple discovered after conducting its 2011 audits as part of its annual Supplier Responsibility Report, which was released late Thursday. In the report, Apple once again detailed its audit process and spelled out its findings, conducting a new high of 339 audits across its manufacturing partners. But the huge jump in underage labor wasn't across the board—it was concentrated in a single circuit board manufacturer, which Apple says was willfully conspiring with families to forge age-verification documents.

According to Apple's new report, the company didn't find any cases of underage workers at its final assembly suppliers in 2012, but it plans to continue going deeper into the supply chain to ferret out violators. These suppliers have apparently told Apple that it's the only company performing such audits.

That much is clear when you get to the part of the report where Apple slams Guangdong Real Faith Pingzhou Electronics Co. (also known as "PZ"). The company produces circuit board components "used by many other companies in many industries" and was found to have 74 cases of underage workers as of January 2012. Apple discovered that PZ was working with one of the area's largest labor agencies to actively recruit and work with underage workers to fake the appropriate documents to make them appear older than they actually were.

As a result, Apple terminated its relationship with PZ and reported the labor agency (Shemzen Quanshun Human Resources) to the provincial governments of Shenzen and Henan. "The agency had its business license suspended and was fined. The children were returned to their families, and PZ was required to pay expenses to facilitate their successful return," wrote Apple. "In addition, the company that subcontracted its work to PZ was prompted by our findings to audit its other subcontractors for underage labor violations—proving that one discovery can have far-reaching impact."

Last year, Apple reported that it found only six active and 13 historical cases of underage labor among its suppliers in 2011—down from 91 total cases found in 2010. Because of these discoveries in recent years, Apple has ramped up its education efforts, helping suppliers identify fake IDs and giving suppliers the names of labor agents that "have been associated with the recruitment of underage workers."

When new violations are found, Apple requires its suppliers to return the workers back to a school chosen by the family and finance their education. "In addition, the children must continue to receive income matching what they received when they were employed. We also follow up regularly to ensure that the children remain in school and that the suppliers continue to uphold their financial commitment," wrote Apple in its latest report.

Apple has come under fire in recent years for its suppliers' labor and safety practices after the publication of a 2006 report highlighting poor conditions, followed by another in the New York Times in early 2012. The latter prompted Apple to become the first technology company to join the Fair Labor Association (FLA) in order to check its own reports against independent audits. The FLA's audits began in February of 2012, followed a month later by a report that revealed more than 50 violations of FLA standards and Chinese law, largely related to the way overtime was handled among employees. But as of August, the FLA reported back to say that Apple and Foxconn (in particular) were indeed improving factory conditions and were actually ahead of schedule in implementing the recommendations from the FLA.

"Our verification shows that the necessary changes, including immediate health and safety measures, have been made," FLA CEO Auret van Heerden said in August. "We are satisfied that Apple has done its due diligence thus far to hold Foxconn accountable for complying with the action plan, including the commitment to reform its internship program."

In addition to the underage labor violations at PZ, Apple's report highlighted its efforts to source conflict-free materials for its products, improve worker safety, and increase training to identify safety hazards. Apple also says it interviewed and surveyed 70,000 workers across its four final assembly facilities in order to see what the workers wanted improved the most—the results showed "opportunities for improvement" in social support, quality of sleep and dining, work-supervisor relationships, and counseling services.

"As a result of our worker surveys at all of the facilities in this pilot, suppliers have taken specific actions, such as changing food vendors, tracking cafeteria food purchases to provide feedback to food vendors, evaluating the impact of room-darkening window shades in dormitories, assigning workers to dormitory rooms based on shift times, and changing security providers for increased coverage," wrote Apple.

170 Reader Comments

Great, now the kids that were bringing in income to a family that desperately needed money can go back to begging. Good job Apple.

I see no mention of age, but I highly doubt they were under 12. A kid that is working at 15 or even 14 is not a big deal. First world age restrictions don't apply here in Asia where kids then to work early. It's simply about existing and making money. There is nothing "better" out there for them in most cases. Making money for their families is survival.

I live in Bangkok and see poverty ever day, far worse than anything in the US. People need to survive. Working for a company like Apple is a big advantage and can provide for entire families and raise the standard of living, not lower it. These kids are better off with a job than on the streets with no money.

Great, now the kids that were bringing in income to a family that desperately needed money can go back to begging. Good job Apple.

I see no mention of age, but I highly doubt they were under 12. A kid that is working at 15 or even 14 is not a big deal. First world age restrictions don't apply here in Asia where kids then to work early. It's simply about existing and making money. There is nothing "better" out there for them in most cases. Making money for their families is survival.

I live in Bangkok and see poverty ever day, far worse than anything in the US. People need to survive. Working for a company like Apple is a big advantage and can provide for entire families and raise the standard of living, not lower it. These kids are better off with a job than on the streets with no money.

You probably missed the part where these kids are going to school, at the expense of the offending company, and retaining the wages they would have earned from the original job? There is no reason to hire kids other than to take advantage of them and their families. There are more than enough Chinese adults to fulfill all of these positions.

Kids are better off in school than finding full time jobs anywhere. When they grow up and get higher skilled jobs, they can send far more home than they would as unskilled laborers.

If this indeed holds true, then kudos to Apple. I find it hard to believe it will actually be honored. If you can fake ages, faking a payment is not far off.

If you're checking directly with the schools to ensure the children are still going, it shouldn't be too hard to check with the families to ensure they're actually receiving payments.

And it's interesting to see that despite the fact that Apple is going far above and beyond other companies with regards to worker conditions in China, they're STILL assumed to somehow be True Evil. Why didn't any of the other companies using PZ find out they were heavy on the underage workers?

Great, now the kids that were bringing in income to a family that desperately needed money can go back to begging. Good job Apple.

I see no mention of age, but I highly doubt they were under 12. A kid that is working at 15 or even 14 is not a big deal. First world age restrictions don't apply here in Asia where kids then to work early. It's simply about existing and making money. There is nothing "better" out there for them in most cases. Making money for their families is survival.

I live in Bangkok and see poverty ever day, far worse than anything in the US. People need to survive. Working for a company like Apple is a big advantage and can provide for entire families and raise the standard of living, not lower it. These kids are better off with a job than on the streets with no money.

you...ahhh.... need to re-read the article. The kids still get paid, plus their parents get to pick a school for them to attend and their education is financed by the contractor. Thats a fairly decent deal. Thats a lot better deal then anyone here in the U.S. would get, all that would happen here is the company would either get fined or sanctioned or yelled at and in more extream cases criminally charged and sent to jail if guilty, and the kids would be without any income or paid education. So, this was better for them, a lot better than kids here in the U.S. would have had.

Good for Apple. As long as there were no repercussions, there was no incentive for the suppliers to change. Losing business money and is a pretty good incentive to keep these suppliers from breaking the law.

"I live in Bangkok and see poverty ever day, far worse than anything in the US. "

I'm guessing you've never been back in the hollars of Southern Appalachia where I'm from or seen people living under bridges or over passes in our cities?

Appalachia ... the issues in Appalachia and a lot of other Southern poverty stricken areas actually are really not that different from a lot of the poverty in Western China - same sorta deal - old school values and agrarian economy.

You know, I don't like Apple's products, their patent stance, or their data protectionism, but damn if this isn't impressive. Apple is a company that specializes in revolutionizing industry practices, and if they can manage to change widely accepted labor rights violations, then more power to them.

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

Audits like this aren't compulsory, and keep in mind that Apple controls more or less its entire supply chain, all the way back to the factories that produce the circuit boards (which is where, apparently, Apple finally stops having exclusive contracts). Dell and HP purchase the components for their PC's from other companies, and those companies are the ones that would potentially be using those workers (of course, if PC assembly is handled in China by underage workers, then there's a case to be made there).

That said, it could be argued that American companies do not have a moral imperative to ensure that the working conditions in the factories that make the underlying components are fair. Apple's most detailed surveys involved its final assembly plants, which I assume work exclusively for Apple. That is where I think companies really should feel obligated, but factories that make the various parts often have contracts with multiple companies.

I'm not saying it's a GOOD thing to ignore it when this goes on, but I think Apple is going above and beyond in this situation. You can't expect companies to follow this as a standard unless a ton of pressure is put on them by the government.

Big points in Apple's favour there. I am not a huge fan of Apple, especially with their recent foray into heavy litigation. A lot of people bash Apple for their price premium, but if the premium includes a guarantee that they are operating in a transparent and socially responsible manner, we'll, that's definitely something I could get into.

I wonder what the track records are for other computer companies like Lenovo, HP, or Dell?

"I live in Bangkok and see poverty ever day, far worse than anything in the US. "

I'm guessing you've never been back in the hollars of Southern Appalachia where I'm from or seen people living under bridges or over passes in our cities?

Appalachia ... the issues in Appalachia and a lot of other Southern poverty stricken areas actually are really not that different from a lot of the poverty in Western China - same sorta deal - old school values and agrarian economy.

When assessing poverty one must look at both degree and scale. Yes, I can find a single individual in the US who is as unfortunate as someone anywhere else, but the question is how many both in gross terms and as a percentage of the total population. Americans such as you do not really comprehend poverty. When you show me vast swaths of Americans with leprosy, shitting in open sewer systems in the middle of the road, we can talk. The poverty level in the US is what? less than $11,000 per year? Do you what the per capita income is of China? $5k. Lets not talk about Somalia ($112/year). Large portions of the world population would not consider denizens of Appalachia to be poor.

Your comment and that of some others here is that of a clueless imbecile, and one that needs to be corrected.

If this indeed holds true, then kudos to Apple. I find it hard to believe it will actually be honored. If you can fake ages, faking a payment is not far off.

I misread - Apple requires its suppliers to pay. It's not clear from the article, but presumably if Apple is cutting ties with the company, they no longer have leverage to make them do this.

However, it would be true for any of its remaining suppliers.

Most likely, the money is just put in a trust and handled by a 3rd party. One lunmp payment made, and then doled out from the trust. Apple can readily enforce this by refusing to make that last payment on goods received, or sue them for damages.

This is also a contractual obligation and contracts ar very easy to prove broken even in Chinase courts, and the punishments will be extreme for doing so.

"I live in Bangkok and see poverty ever day, far worse than anything in the US. "

I'm guessing you've never been back in the hollars of Southern Appalachia where I'm from or seen people living under bridges or over passes in our cities?

Appalachia ... the issues in Appalachia and a lot of other Southern poverty stricken areas actually are really not that different from a lot of the poverty in Western China - same sorta deal - old school values and agrarian economy.

When assessing poverty one must look at both degree and scale. Yes, I can find a single individual in the US who is as unfortunate as someone anywhere else, but the question is how many both in gross terms and as a percentage of the total population. Americans such as you do not really comprehend poverty. When you show me vast swaths of Americans with leprosy, shitting in open sewer systems in the middle of the road, we can talk. The poverty level in the US is what? less than $11,000 per year? Do you what the per capita income is of China? $5k. Lets not talk about Somalia ($112/year). Large portions of the world population would not consider denizens of Appalachia to be poor.

Your comment and that of some others here is that of a clueless imbecile, and one that needs to be corrected.

So your saying that poverty in another country that is condoned by and un-aided by its own government is the fault of the U.S. ?

Poverty is a bad thing, no matter where its at. However, why should we be blamed when another country's government does everything it can to maintain that poverty by clinging to ineffective methods of addressing such poverty, or simply ignoring it, while at the same time refusing help from other countries and taking any help that does arrive and converting it into a government benefit instead of a people benefit. Having been to Somalia, I can tell you, and i'll be as nice as possible when I say this because it really enrages me and I want to cuss the crap out of you for making such ignorant comments, that the governments only concern is not for their people but rather for their own butts, so yeah, lets not talk about Somalia where I saw on 75 different occaisions food and medical supplies intended for the poverty striken and sick taken and given away to the military for their use by government order.

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

We don't know they aren't conducting audits, maybe they just don't brag about it like Apple does for every little thing.

Actually, we do know. Other than apple they have all refused to join the FLA. Sony has one limited anual audit of only some facilities, and HP does a few, but they're schedueld, and limited in scope. Samsung runs most of it;s own manufacturing and thus doesnl;t self-audit at all, and is in fact often caught using illegal labor, including sourcing manufacturing from a PRISON CAMP last year which is illegal outright in China. Apple is the only one doing invasive paperwork audits (sometimes taking weeks), and also does at least one completely unanounced spot check a year. They've been doing that more than a decade, they started publishing that information voluntarily in 2006 to shame their competitors. They have a long record of action plans, fines, and contract terminations without pay uin their history for violations. They have long been extremely open about this. Note, noone ever questioned apple's overtime or youth labor issues with FoxConn, only working conditions and manager abuses, whicjh turned out to basically not be an issue, and apple was holding FoxConn to standards well higher than the law to start with, and higher than most competitors. yes, vuiolations are found, most of them are people lying to the hiring company to get a job, not wilful violations, and with 300,000 employees, HR violations and verbal and physical abuse is inevitable, I;ve seen it in ther USA in companies with fewer thah 10K employees on larger scales than FoxConn reports.

"I live in Bangkok and see poverty ever day, far worse than anything in the US. "

I'm guessing you've never been back in the hollars of Southern Appalachia where I'm from or seen people living under bridges or over passes in our cities?

Appalachia ... the issues in Appalachia and a lot of other Southern poverty stricken areas actually are really not that different from a lot of the poverty in Western China - same sorta deal - old school values and agrarian economy.

When assessing poverty one must look at both degree and scale. Yes, I can find a single individual in the US who is as unfortunate as someone anywhere else, but the question is how many both in gross terms and as a percentage of the total population. Americans such as you do not really comprehend poverty. When you show me vast swaths of Americans with leprosy, shitting in open sewer systems in the middle of the road, we can talk. The poverty level in the US is what? less than $11,000 per year? Do you what the per capita income is of China? $5k. Lets not talk about Somalia ($112/year). Large portions of the world population would not consider denizens of Appalachia to be poor.

Your comment and that of some others here is that of a clueless imbecile, and one that needs to be corrected.

And cost of living in those areas is far, far different than it is in the US. I really do not give a rat's ass if the rest of the world considers them "poor enough" or not.

I still don't like Apple but I really get the feeling that their new CEO is a decent man who is working hard to make them a more ethical company compared to the truly evil and illegal behaviour of their former leader (who had a very sad end that I would wish on no one but that doesn't mean we shouldn't acknowledge that he didn't seem to be a very decent human being).

I hope that Apple's competitors will also be inspired by such moves to clean up their act ethically - Samsung being the biggest phone manufacturer probably have a lot to do to get their house in order here too...

"I live in Bangkok and see poverty ever day, far worse than anything in the US. "

I'm guessing you've never been back in the hollars of Southern Appalachia where I'm from or seen people living under bridges or over passes in our cities?

Appalachia ... the issues in Appalachia and a lot of other Southern poverty stricken areas actually are really not that different from a lot of the poverty in Western China - same sorta deal - old school values and agrarian economy.

When assessing poverty one must look at both degree and scale. Yes, I can find a single individual in the US who is as unfortunate as someone anywhere else, but the question is how many both in gross terms and as a percentage of the total population. Americans such as you do not really comprehend poverty. When you show me vast swaths of Americans with leprosy, shitting in open sewer systems in the middle of the road, we can talk. The poverty level in the US is what? less than $11,000 per year? Do you what the per capita income is of China? $5k. Lets not talk about Somalia ($112/year). Large portions of the world population would not consider denizens of Appalachia to be poor.

Your comment and that of some others here is that of a clueless imbecile, and one that needs to be corrected.

So your saying that poverty in another country that is condoned by and un-aided by its own government is the fault of the U.S. ?

Poverty is a bad thing, no matter where its at. However, why should we be blamed when another country's government does everything it can to maintain that poverty by clinging to ineffective methods of addressing such poverty, or simply ignoring it, while at the same time refusing help from other countries and taking any help that does arrive and converting it into a government benefit instead of a people benefit. Having been to Somalia, I can tell you, and i'll be as nice as possible when I say this because it really enrages me and I want to cuss the crap out of you for making such ignorant comments, that the governments only concern is not for their people but rather for their own butts, so yeah, lets not talk about Somalia where I saw on 75 different occaisions food and medical supplies intended for the poverty striken and sick taken and given away to the military for their use by government order.

No I'm not saying that. How can you possibly infer that from what I wrote?

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

That's the thing I don't understand. Everyone pretty much manufactures in China these days, but Apple is the only one who gets consistently nailed to the wall about it.

Probably because whereas other manufacturers pass on the cost margin savings for a budget price Apple has such grotesque margins that they could easily afford to do at least a portion of their manufacturing domestically.

I suspect this wasn't your intent, but the subtext of your message is that it's OK for other companies to take advantage of sub-standard labor practices because their products are so cheap.

If Dell, HP, etc. is charging so little for their products that their only choice is to employ children or to "look the other way" with suppliers that do not treat their employees ethically, that's something Dell, HP, etc. need to correct, and the market needs to realize their pricing is not sustainable or moral. Luckily, perhaps as a result of Apple's higher profile, all companies seem to be moving ever-so-slowly toward more ethical models of manufacture, whether it's limited "in-sourcing" experiments, or demanding accountability from SE Asian contractors.

While I commend Apple for this effort, they shouldn't be the only ones doing this. Why aren't we holding other companies responsible? What I'd like to see are other companies following suit and firing this company. Even if you aren't willing to audit them yourselves, if someone else has and found these kinds of violations, seems bad taste to stick with them in spite of. Even if Apple is the only one auditing, if upon discovering violations Apple fires them, and other companies follow, that would send a strong message.

I guess the potential downside is what was mentioned previously, as to whether the company in violation has any responsibility to pay for the kid's education if the company enforcing it fires them.

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

We don't know they aren't conducting audits, maybe they just don't brag about it like Apple does for every little thing.

Actually, we do know. Other than apple they have all refused to join the FLA. Sony has one limited anual audit of only some facilities, and HP does a few, but they're schedueld, and limited in scope. Samsung runs most of it;s own manufacturing and thus doesnl;t self-audit at all, and is in fact often caught using illegal labor, including sourcing manufacturing from a PRISON CAMP last year which is illegal outright in China. Apple is the only one doing invasive paperwork audits (sometimes taking weeks), and also does at least one completely unanounced spot check a year. They've been doing that more than a decade, they started publishing that information voluntarily in 2006 to shame their competitors. They have a long record of action plans, fines, and contract terminations without pay uin their history for violations. They have long been extremely open about this. Note, noone ever questioned apple's overtime or youth labor issues with FoxConn, only working conditions and manager abuses, whicjh turned out to basically not be an issue, and apple was holding FoxConn to standards well higher than the law to start with, and higher than most competitors. yes, vuiolations are found, most of them are people lying to the hiring company to get a job, not wilful violations, and with 300,000 employees, HR violations and verbal and physical abuse is inevitable, I;ve seen it in ther USA in companies with fewer thah 10K employees on larger scales than FoxConn reports.

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

That's the thing I don't understand. Everyone pretty much manufactures in China these days, but Apple is the only one who gets consistently nailed to the wall about it.

Probably because whereas other manufacturers pass on the cost margin savings for a budget price Apple has such grotesque margins that they could easily afford to do at least a portion of their manufacturing domestically.

Apples *NET* margins are slightly below Microsoft and Google. So do they also have grotesque margins?

So where's the outrage against Dell, HP, and other companies that have used these suppliers, but apparently weren't conducting audits like this?

That's the thing I don't understand. Everyone pretty much manufactures in China these days, but Apple is the only one who gets consistently nailed to the wall about it.

Probably because whereas other manufacturers pass on the cost margin savings for a budget price Apple has such grotesque margins that they could easily afford to do at least a portion of their manufacturing domestically.

Apples *NET* margins are slightly below Microsoft and Google. So do they also have grotesque margins?

Considering MS and Google aren't hardware vendors you should probably go back and find another two vendors to compare Apple with.